Special Focus: Recent Oil Price Developments in Perspective

Transcription

1 Jan- Mar- May- Jul- Sep- Nov- Jan-5 Mar-5 May-5 For more information, visit Overview Table of Contents Global growth hit a soft patch in 5Q, driven by slowing activity in the United States and China, outright contraction in Russia and weaker growth across major commodity exporters. Conditions should gradually improve in Q as the U.S. economy regains momentum, the Euro Area and Japan continue to recover and headwinds in some large emerging economies diminish. Monthly highlights Special focus... Major data releases.8 Economic developments...9 Financial markets... Chart of the Month German -year bond yields have risen sharply since mid-april, following historically low levels reached after the start of ECB s quantitative easing program. The rout also contributed to a rebound in U.S. Treasury yields, but spillovers to emerging market currencies and capital flows remained limited as the dollar depreciated and commodity prices recovered over the same period. German and U.S. long-term interest rates Basis points Basis points Germany -year government bond yields (LHS) U.S. -year government bond yields (RHS) Special Focus: Recent Oil Price Developments in Perspective The cumulative drop in oil prices since June was the third largest since 97, taking place against a backdrop of rising supply and weakening demand in previous years. Both the -5 and the oil price drops marked the end of periods of high oil prices during which unconventional oil supplies (from Mexico and the United Kingdom in the 98s; shale oil, tar sands, and biofuels in the s) steadily expanded. Following the collapse, Brent oil prices remained below $/bbl for nearly two decades. Some of the conditions behind the low oil prices during the 98- period are no longer in place, but underlying factors also point to a prolonged period of lower prices in current circumstances. Prepared by Marc Stocker with contributions from John Baffes, Eung Ju Kim and Ekaterine T. Vashakmadze. Data support from Trang Nguyen and Xinghao Gong. DECPG - May 5

2 May 5 Monthly Highlights Global growth: a soft patch at the start of 5. Based on partial data releases available thus far, global growth in the first quarter of the year was about.8 percent (quarter-on-quarter annualized rate), down from.5 percent in the fourth quarter of (Figures.A and.b). If confirmed, the growth slowdown would be comparable to that observed in the first quarter of. The deceleration was broad-based, with slowing activity in the United States and China, outright contraction in Russia and weaker growth across major oil exporters. On the positive side, the recovery in the Euro Area and Japan has gained strength, diminishing some of the downside risks previously identified for these economies. Global manufacturing: slow in Q, modest improvement ahead. Evidence of a soft patch in global manufacturing activity manifested itself in weak industrial production and goods trade data up to March, and a further slide in global manufacturing PMI in April (Figure.C). This marks the fifth consecutive decline in the global manufacturing PMI, driven by deteriorating conditions in large emerging economies (Figure.D). Global export orders remained weak in April as well, but forward-looking indicators, such as the ratio of new orders to inventories, improved. With conditions generally improving in the services sector, and surveys in manufacturing being slightly more upbeat than actual production data, conditions remain in place for a pickup in global growth during Q. United States: weakness partly due to one-off factors. The U.S. economy came to a virtual standstill in Q (Figure.B), growing by. percent (quarter-on-quarter annualized rate) according to preliminary estimates. While a strong dollar dragged down exports and industrial activity, the weakness was mostly related to off-one effects of bad weather in the East, port disruptions in the West, sharp cutbacks in capital spending in the oil industry and some residual seasonality in GDP data (the U.S. Bureau of Economic Analysis is currently reviewing seasonal adjustment procedures and will likely implement data revisions with the release of second quarter GDP on July ). Forward-looking indicators remain broadly positive, while labor market conditions continue to tighten. The, increase in U.S. non-farm payroll employment in April is slightly above an average monthly job creation of 95, since the start of the year. The U.S. Federal Reserve is still expected to start hiking policy rates during the second half of 5, reflecting continued improvements in the labor market and prospects for rising inflation from current low levels (. percent in March for personal consumption expenditures excluding food and energy). Euro Area and Japan: signs of a broadening recovery. Euro Area growth picked up to. percent (quarter-onquarter annualized rate) in Q from. percent in Q. The gradual improvement was supported by a weakening euro, declining oil prices and more accommodative financing conditions. The recovery has appeared to be increasingly supported by domestic demand and also broadened across countries, with a significant improvement in France and particularly robust growth in Spain. The recovery momentum slowed in Germany, but remains on track for a strong performance this year. Although still somewhat mixed, March data and confidence indicators in April/May point to further improvements during Q. Growth in Japan accelerated to. percent in Q (quarter-on-quarter annualized rate), helped by a recovery in private consumption and investment, combined with a significant build-up in inventories. Exports accelerated but imports rebounded more strongly, leading to a negative contribution of net trade to growth in Q. Available indicators point to continued, albeit moderate, growth in Q. China: stimulus to buffer the slowdown. Following China s growth deceleration in Q to 5. percent (quarter-onquarter annualized rate), April activity data showed some tentative signs of improvement, with industrial production picking up and retail sales remaining solid. However, investment lost further momentum, credit growth slowed and the manufacturing PMI remained weak in May. Following several consecutive interest rate cuts and reductions in the required reserve ratio, the People s Bank of China recently announced plans to accept municipal bonds as collateral for its refinancing and lending operations with commercial banks. This complements earlier announcements of a RMB trillion debt-for-bond swap envisaged in the 5 budget to reduce local governments interest burdens. These measures should help prevent a local government spending squeeze while limiting off-balance-sheet activities. Emerging market growth: generally weak. Beyond China, growth slowed in East Asia in Q, including in Indonesia, Malaysia, and Thailand. This follows strong outcomes in the final quarter of last year and, for commodity exporters, reflects continued adjustments to lower commodity prices. In the Latin America and Caribbean region, growth slowed in Chile, Peru and Mexico, and is expected to be negative in Brazil (GDP estimates released on May 9). In Russia, output contracted significantly in Q, reflecting the adverse effects of the earlier decline in oil prices, but somewhat less than initially expected. Negative growth was also observed on a quarter-on-quarter basis in Nigeria in Q, while activity slowed more than expected in South Africa. In contrast, Q GDP growth surprised on the upside in Central and Southeastern Europe (especially Poland, Hungary, the Czech Republic, Slovakia and Romania), helped by improving conditions in the Euro Area.

3 May 5 Global inflation: bottoming out. The sharp fall in oil prices since June continued to weigh on global inflation in Q 5, keeping the proportion of countries with low or negative inflation at an unusually high level (Figure.E). However, this dampening impact started dissipating in a number of oil-importing countries in April, and the recent rebound in oil prices limits the room for further declines in global inflation in coming months. Coincidently, long-term inflation expectations have recovered from January lows in both the Euro Area and in the United States, moving closer to central bank targets. Receding concerns about deflation reflected a confluence of factors, including the start of quantitative easing in the Euro Area in March, some depreciation of the U.S. dollar and a rebound in oil prices in April and May. The correlation between long-term inflation expectations and oil price developments has been tight since mid- (Figure.F), illustrating a broader shift in market sentiment that had also been reflected in a weakening U.S. dollar and upward movements in global bond yields. European bond market rout: mostly a technical correction. Since reaching a historical low at.7 percent on April, German -year yields rose by 5 basis points (bps), their largest monthly surge since June 99. The sharp adjustment followed a rally that pushed German yields to unsustainably low levels after the announcement of ECB s quantitative easing program earlier this year. The rebound was not immediately connected to changes in economic fundamentals, as inflation expectations increased only marginally since mid-april and economic data releases have been relatively mixed over the same period (Figure.A). A deterioration in liquidity conditions in core-european bond markets, captured by declining trading volumes behind given price changes, appears to have exacerbated the market rout. Rates in periphery countries increased as well, but less than in core countries. Long-term interest rates are unlikely to rise significantly further, as accelerated bond buying by the ECB should exert downward pressure in the months ahead. Global interest rates: yields rising in the U.S., broadly stable in emerging markets. The benchmark -year U.S. Treasury yield has increased by basis points since mid-april, mirroring the increase in German yields (Figure.B). With markets perceiving setbacks in the U.S. recovery, long-term inflation prospects stabilizing since mid-april (according to -year breakeven rates) and the likelihood of a liftoff in U.S. policy rates in June vanishing, external factors appear to have played a crucial role in the recent uptick in U.S. long-term yields. So far, these adjustments have had limited repercussions for emerging market borrowing conditions, with long-term interest rates generally increasing less than in the United States and Euro Area (Figure.C). Since April 7, emerging market bond spreads (as measured by the EMBIG) have actually narrowed and equity markets remain buoyant (Figure.D). This resilience partly reflects the coincident depreciation in the U.S. dollar and a partial recovery in commodity prices. Capital flows to developing countries: still robust in April. After a rebound in March, gross capital flows to developing countries maintained their robust momentum at the start of the second quarter. At $58 billion, April gross capital inflows were modestly higher than March, and significantly stronger than the monthly average of $7 billion in the first quarter of 5 (Figure.E). The bulk of April inflows came in the form of international bond issuance, with Chinese borrowers dominating issuance activity. Equity flows were up significantly as well, with China accounting for 5 percent of total flows. In contrast, bank lending plummeted in April on the back of a sharp drop in loans to East Asia. Weekly portfolio inflows to emerging-market bond and equity funds have been steady late April, but displayed some slowdown in May. Oil prices: some rebound and volatility. Global oil prices strengthened in May, with Brent trading around $ per barrel and the West Texas Intermediate at $58 per barrel, more than $5 above their end-january troughs, but well below their mid- levels of $5. Oil price volatility, which increased following OPEC s decision not to engage in supply controls last November, has moderated from a peak in mid-february and has been significantly lower than during previous episodes of sustained oil price declines (Special Focus section below). Prices have recently been supported by expectations of lower stocks in the United States and increasing demand by some emerging economies, especially India. Expectations of material adjustments in U.S. oil production have not materialized yet, despite a more than 5 percent decline in the rig count since November last year (Figure.F). OPEC production also rose, with Saudi Arabia averaging mb/d in March and April. Greece: negotiations continue. After borrowing from its IMF holding account to make its scheduled debt repayments to the institution of nearly billion in May, Greece faces another. billion of IMF payments in June and owes.7 billion to the ECB in July and August. The government is expected to run out of funds in June unless agreement on a list of structural reforms and revised fiscal targets can be reached with ECB, EU, and IMF. While a default on a debt payment would not necessarily trigger exit from the Euro Area, it could cause banking sector stress requiring the imposition of capital controls and a severe recession. Thus far, there have been no measurable spillovers to other periphery countries, but confidence could be impacted if conditions continue to deteriorate. Some Eastern European countries could be impacted by a default through sizeable subsidiaries of Greek banks.

4 Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan-5 Feb-5 Mar-5 Apr-5 Jan- Aug- Mar- Oct- May- Dec- United States United Kingdom Euro Area World India China Russia Brazil South Africa Q Q Q Q 5Q Malaysia China Indonesia Hungary Japan Euro Area Mexico South Africa United Kingdom United States Nigeria Russia May 5 Figure : A. Global GDP growth B. GDP growth for selected countries Percent Global, Q-O-Q annualized Available countries, Q-O-Q annualized Percent, quarter-over-quarter annualized 8 5Q Q C. Global manufacturing PMI, industrial production and trade Index Year-over-year, percent Manufacturing PMI (LHS) Industrial production (RHS) Global trade (RHS) 5 C. Manufacturing and composite PMI for selected countries Index Composite - Apr. 5 Manufacturing - Apr. 5 Composite - Dec. Manufacturing - Dec. Source: World Bank, CPB, Haver Analytics. Note: Last observation is April 5. E. Share of countries with low or negative inflation Share of countries 5 Below percent Below zero 9 5 Note: Data for 7 countries. Last observation is April 5. F. Euro Area inflation expectations and U.S. breakeven inflation and oil price Percent US$ per barrel Euro 5yr/5yr forward inflation expectation (LHS) US -year breakeven inflation (LHS) Brent oil price (RHS) Source: World Bank, Bloomberg, Federal Reserve Bank of St. Louis. Note: Last observation is May, 5. 8

5 Oct- Dec- Feb- Apr- Jun- Aug- Oct- Dec- Feb-5 Apr-5 Jan- Jun- Nov- Apr- Sep- Feb- Jul- Dec- May- Oct- Mar- Aug- Jan-5 Germany Czech Republic Peru Spain United States Romania Philippines Thailand Hungary Singapore South Africa Turkey Colombia Japan India Italy Chile Brazil Vietnam Jan- Mar- May- Jul- Sep- Nov- Jan-5 Mar-5 May-5 Jan- Mar- May- Jul- Sep- Nov- Jan-5 Mar-5 May-5 May 5 Figure : A. German long-term bond yields, Euro Area inflation expectations and economic surprise Basis points and percent Percent Germany -year government bond yields (LHS) Euro 5yr/5yr forward inflation expectation (LHS) Euro-based Economic Surprise Index (RHS) B. Germany and U.S. long-term bond yields Basis points Basis points Germany -year government bond yields (LHS) U.S. -year government bond yields (RHS) Source: World Bank, Bloomberg, Haver Analytics. Note: Last observation is May, 5. C. Change in -year government bond yields for selected countries, May, 5 Change since April 7, 5, basis points Note: Last observation is May, 5. D. Financial market reaction to global bond sell-off Percent Europe equity EM equity World equity EM bond - $ Corp US bond - High yield EM bond - $ Sov. US equity EM bond - local sovereign Eurozone bond - sovereign U.S. Treasury EM currency Source: World Bank, Bloomberg. - Since April 7 YTD E. Gross capital flows to developing countries F. U.S. oil rig count, and U.S. and Saudi Arabia oil production Billion US$ 8 Bank Bond Equity Count Million barrels per day US oil rig count 7 8 Saudi Arabia oil production US oil production Source: World Bank, Dealogic. Note: Last observation is April 5. Source: World Bank, Baker Hughes, International Energy Agency. Note: Last observation is May 5. 5

6 May 5 Special Focus: Recent Oil Price Developments in Perspective The -5 oil price decline: adjusting to a new equilibrium. Despite a recent rebound, the drop in oil prices since June remains the third largest over the last three decades (Figure.A). The decline took place against the backdrop of rising supply growth in previous years especially from unconventional sources in the United States and a shift in OPEC policy. It also coincided with weakening demand and a sharp appreciation of the U.S. dollar, which tends to be negatively correlated with oil and other commodity prices. Both the realized and implied volatilities of oil prices increased more than three-fold since OPEC s decision to abandon price targeting last November. However, volatility remains well below spikes observed during previous crashes in 985-8, 99-9, and 8-9 (Figure.B). Historical perspective: significant parallels with Of the four largest oil price declines since 97, there are important similarities between the current episode and that of Both occurred after a period of high prices, which were supported by OPEC s policies. In both cases, high prices encouraged rising non-opec oil supplies: from Alaska, North Sea, and Mexico in and from U.S. shale, Canadian oil sands, and biofuels in -5. And, in both episodes, OPEC abandoned price targeting. In -5, OPEC acted very quickly within months after prices began declining while it took several years in There is also a similarity between the two other episodes (99-9 and 8-9) in that both were precipitated by events largely outside the energy sector: the First Gulf War (the former) and the global financial crisis (the latter). The 8-9 price drop had specific characteristics: it was much more correlated with equity and exchange rate movements than were other episodes. Similarly, co-movement across most commodity prices was high during 8 twice as high compared to the historical average (and other crashes). Although volatility spiked during all four episodes, the increase was much smaller (and began much later) during the last crash, a result consistent across several measures of volatility (Figure.C) drop: followed by two decades of weak prices. Following the collapse, Brent prices averaged $/bbl until December, beginning and ending the period at about $/bbl. Prices remained low for mainly for supply- related reasons as well as a shift in OPEC policy. On the supply side, OPEC s spare capacity stood at record high mb/d in 985 (Figure.D). A surplus also developed in the former Soviet Union (FSU) during the transition of the 99s. Although FSU oil production fell by 5.5 mb/d initially, most was brought back on line. These supply cushions kept oil prices low for several years. Medium-term prospects: persistently low oil prices. Conditions are in place for continued low oil prices in the short term and only a slow recovery over the medium term, assuming OPEC does not re-engage in supply management. o o On the demand side, high prices and new efficiency standards have reduced OECD countries oil consumption since 5 by nearly 5 mb/d. Most forecasts show little or no growth in OECD consumption going forward, and some show declines due to anticipated increases in fuel efficiency and environmental constraints. The catch-up potential in developing countries (from significantly lower per capita consumption) is expected to materialize only gradually. On the supply side, U.S. shale oil production provided much of the supply growth during the past five years. Although shale oil costs vary widely (some well below $5/bbl and others above $7/bbl), the industry s production costs are falling due to greater operational knowledge, improved technologies, and lower input prices. Lower fixed costs compared with conventional oil supplies and short project life-spans make shale oil a highly flexible source of supply. Thus, shale oil production may continue to contain oil prices well below levels. Conversely, scope for further oil price declines may be limited by OPEC s modest spare capacity (.5 mb/d excluding Iraq, Iran, Libya and Nigeria) and reduced incentives from high prices for technological breakthroughs, either through improvement in battery technology or increased use of natural gas in transportation.

7 Jan-85 Jan-88 Jan-9 Jan-9 Jan-97 Jan- Jan- Jan- Jan-9 Jan- Jan-5 May 5 Figure : A. Crude oil prices (real, terms) B. Oil price volatility, -day window US$/bbl 5 9 OPEC abandons price targeting: Price drops % in 8 days First Gulf war: Price drops 8% in 7 days 8 financial crisis: Price drops 77% in days 95-5 average price: $8./barrel OPEC abandons price targeting: Price drops 5% in 8 days Source: World Bank. Note: Oil prices have been deflated by the U.S. CPI ( constant terms). Percent 7 5 Source: World Bank. First Gulf war OPEC abandons price targeting 8 financial crisis C. Oil price volatility during the four largest price declines of past three decades Source: World Bank. Standard deviation of returns Interquartile range GARCH (full sample) GARCH (5-day window) D. OPEC oil production and capacity mb/d 5 5 Capacity Production Source: International Energy Agency and KBC Energy Economics. 7

8 May 5 Major Data Releases 5 May, 5-7 May 5 Upcoming releases: 8 May, 5-5 Jun 5 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Actual Forecast Previous Brazil 5/5/5 PPI (Y/Y) MAR.%.5%.8% Philippines 5/8/5 GDP (Q/Q) Q.5% United Kingdom 5/5/5 PMI Services APR Sweden 5/9/5 GDP (Q/Q) Q.% United States 5/5/5 PMI Composite APR Czech Republic 5/9/5 GDP (Q/Q) Q.% Euro Area 5//5 PMI Composite APR Greece 5/9/5 GDP (Q/Q) Q -.% France 5/7/5 Industrial Production (Y/Y) MAR. %. %.% Italy //5 GDP (Q/Q) Q.% Czech Republic 5/7/5 Industrial Production (Y/Y) MAR.5 % 5 %.5 % Euro Area //5 PMI Manufacturing MAY 5 Malaysia 5/7/5 Interest Rate Decision APR.%.%.% South Africa //5 PMI Manufacturing MAY 5.5 Mexico 5/8/5 PPI (Y/Y) APR.7 % -. % Brazil //5 PMI Composite MAY. Turkey 5/8/5 Industrial Production (Y/Y) MAR.7% -.5%.% United States //5 PMI Composite MAY 57 United States 5/8/5 Participation Rate APR.8%.8%.7% Philippines //5 CPI (Y/Y) MAY.% Canada 5/8/5 Unemployment Rate APR.8 %.9 %.8 % Germany /8/5 Industrial Production (Y/Y) APR -.% Malaysia 5//5 Industrial Production (Y/Y) MAR.9%.5% 5.% China /8/5 CPI (Y/Y) MAY.5% Denmark 5//5 CPI (Y/Y) APR.5 %. %. % Mexico /9/5 CPI (Y/Y) MAY.% Greece 5//5 Industrial Production (Y/Y) MAR 5. % -.9 % Philippines /9/5 Unemployment Rate Q.% United Kingdom 5//5 Industrial Production (Y/Y) MAR.7 %.8 %. % Estonia /9/5 GDP (Q/Q) Q.% South Africa 5//5 Manufacturing Production (Y/Y) MAR. % - -.% France //5 Industrial Production (Y/Y) APR.% Germany 5//5 GDP (Q/Q) Q. %.5 %.7 % Turkey //5 GDP (Q/Q) Q.7% Eurozone 5//5 GDP (Q/Q) Q. %. %. % Malaysia //5 Industrial Production (Y/Y) APR.9% Greece 5//5 GDP (Q/Q) Q -. % -.5 % -. % France //5 CPI (Y/Y) MAY.% Poland 5//5 CPI (Y/Y) APR -. % -. % -.5 % China //5 Retail Sales (Y/Y) APR.% Brazil 5//5 Retail Sales (Y/Y) MAR. %. % -.% Japan //5 Industrial Production (Y/Y) APR -.7% Japan 5/5/5 Consumer Confidence Index APR Euro Area //5 Industrial Production (Y/Y) APR.8% Poland 5/5/5 GDP (Q/Q) Q. % -.7 % Netherland /5/5 Retail Sales (Y/Y) APR.% Hongkong 5/5/5 GDP (Q/Q) Q. %. %. % Turkey /5/5 Unemployment Rate MAR.% Thailand 5/7/5 GDP(Q/Q) Q. % -.95 %.% United States /5/5 Industrial Production (Y/Y) MAY.9% Japan 5/8/5 Industrial Production (Y/Y) MAR -.7 % - -.% Euro Area //5 Employment (Y/Y) Q.9% Japan 5//5 GDP (Q/Q) Q.% -.% New Zealand /7/5 GDP (Q/Q) Q.8% Eurozone 5//5 PMI Composite MAY South Africa /8/5 Wholesale Sales (Y/Y) APR.8 % Eurozone 5//5 PMI Services MAY Hong Kong /8/5 Unemployment Rate MAY. % Eurozone 5//5 PMI Manufacturing MAY UK /8/5 Retail Sales (Y/Y) MAY.7 % South Africa 5//5 Wholesale Sales (Y/Y) MAR.8% - -.% United States /8/5 CPI (Y/Y) MAY -. % UK 5//5 Retail Sales (Y/Y) APR.7%.8%.% Canada /9/5 Retail Sales (Y/Y) APR. % Mexico 5//5 GDP (Q/Q) Q.5%.5%.% Hong Kong //5 GDP (Q/Q) Q. % United States 5//5 PMI Manufacturing MAY Mexico //5 Retail Sales (Y/Y) APR 5.5 % Germany 5//5 GDP (Q/Q) Q.%. %.7% Poland //5 Unemployment Rate MAY. % Italy 5//5 Retail Sales (Y/Y) MAR -.5%. % -.% Italy //5 Retail Sales (Y/Y) APR -.5 % United States 5//5 CPI (Y/Y) APR -.% -.5 % -.% France //5 GDP (Q/Q) Q F. % Canada 5//5 Retail Sales (Y/Y) MAR.%.%.5% Malaysia /5/5 Unemployment Rate APR. % South Africa 5//5 GDP (Q/Q) Q.%.7%.% Argentina /5/5 Industrial Production (Y/Y) MAY -.5 % 8

9 May 5 Economic Developments indicators expressed as %ch y/y, except Industrial Production quarterly figures are %ch q/q, annualized 5 Q Q Q Q Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Industrial Production, S.A. World High Income Countries Developing Countries East Asia and Pacific East Asia x. China Europe and Central Asia Latin America and Caribbean Middle East and N. Africa South Asia Sub-Saharan Africa Inflation, S.A. High Income Countries Developing Countries East Asia and Pacific Europe and Central Asia Latin America and Caribbean Middle East and N. Africa South Asia Sub-Saharan Africa Inflation is calculated as the GDP-weighted average for all groups. Trade and Finance indicators expressed as %ch y/y, except International Reserves are %ch p/p and trade quarterly figures are %ch q/q, annualized 5 Q Q Q Q Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Exports, Nominal, US$, S.A. World High Income Countries Developing Countries East Asia and Pacific Europe and Central Asia Latin America and Caribbean Middle East and N. Africa South Asia Sub-Saharan Africa Imports, Nominal, US$, S.A. World High Income Countries Developing Countries East Asia and Pacific Europe and Central Asia Latin America and Caribbean Middle East and N. Africa South Asia Sub-Saharan Africa International Reserves, US$ High Income Countries Developing Countries East Asia and Pacific Europe and Central Asia Latin America and Caribbean Middle East and N. Africa South Asia

10 May 5 Financial Markets 5 MRV Chg since Q Q Q Q Q Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Sep- '8 Interest rates and LIBOR (%) U.S. Fed Funds Effective ECB repo US$ LIBOR -months EURIBOR -months US -yr Treasury yield German Bund, yr Spreads (basis points) JP Morgan Emerging Markets Asia Europe Latin America & Caribbean Middle East Africa Stock Indices (end of period) Global (MSCI) High-Income ($ Index) United States (S&P-5) Euro Area (S&P-5$) Japan (Nikkei-5) Developing Markets (MSCI) EM Asia EM Europe EM Europe & Middle East EM Latin America & Caribbean Exchange Rates (LCU / USD) High Income Euro Area Japan Developing Brazil China Egypt India Russia South Africa Memo: USA nominal effective rate MRV = Most Recent Value. MSCI Indices for Asia, Africa, and Europe and C. Asia, for 8 are calculated from February-December, due to data availability. Change expressed in levels for interest rates and spreads; percent change for stock market and exchange rates. Commodity Prices MRV Chg since Q Q Q Q Q Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Sep- '8 Oil price, $/b, nominal Non - Oil Index Metals and Minerals Index Baltic Dry Index Simple average of Brent, Dubai and WTI. Base Date = Jan, due to data availability. The Index component combination in the Weekly tables differs from that of the Pink Sheet. Base Date = Jan, due to data availability. The Index component combination in the Weekly tables differs from that of the Pink Sheet. Base Date = May, 985